NEW YORK--(BUSINESS WIRE)--Sandell Asset Management Corp. (“Sandell”), a large shareholder of Ethan
Allen Interiors Inc. (“Ethan Allen” or the “Company”) (NYSE:ETH), has
filed a preliminary proxy statement in connection with its campaign to
elect its slate of new, highly-qualified candidates to the Board of
Directors (the “Board”) of Ethan Allen. This step was taken after
Sandell’s recent attempts to reach an amicable resolution with the
Company that would have avoided the need for a contentious proxy battle
were rejected by Farooq Kathwari, Ethan Allen’s Chairman, CEO, and
President. Tom Sandell, the CEO of Sandell Asset Management, issued the
following statement:

“It is unfortunate that Farooq Kathwari has rejected the good faith
attempts that we have made to seek an amicable resolution that would
have greatly enhanced the Ethan Allen Board of Directors and better
positioned the Company to deliver increased value to shareholders.
Instead, Mr. Kathwari seems to be content with using the Company’s
stockholders’ money to forestall our efforts to bring about much-needed
change at Ethan Allen. While we were in fact willing to engage in
further negotiations, it became painfully clear that Mr. Kathwari had no
interest in pursuing meaningful change when he failed to even offer a
counter-proposal.

“What was most distressing in our interaction with Mr. Kathwari was what
we viewed to be his total disregard for the Company’s stock price
performance, even going so far as to say, “We run [Ethan Allen] like a
private company.”(1) The fact of the matter is that the
Company’s stock price is lower now than it was 10 years ago and Ethan
Allen shareholders have suffered years of poor performance versus its
peers as well as the broader market. The stock price of Ethan Allen has
underperformed its peers by 119% over the last 10 years. It seemed to us
that Mr. Kathwari was in complete denial of the fact that the only
metric by which investors measure value is a company’s stock price.

“Since we first publicly-voiced our concerns about Ethan Allen and the
years of governance failings that we believe have contributed to the
Company’s poor performance, we have heard from numerous members of the
investment community, and the key concern that they have voiced to us
relates to the Company’s inability to generate sustained revenue growth.
We believe this can be traced to the Board’s stale and outmoded
merchandising and marketing strategy that has failed to appeal to modern
consumers against a retail backdrop of increasing online sales.

“Below is a link to some discussion materials that graphically depict
how the Company has failed to increase revenue over the last several
years versus its peers, and particularly its online efforts versus its
two most-often cited competitors, namely Restoration Hardware and
Williams-Sonoma (Pottery Barn). Some of the salient points illustrated
include the following:

Ethan Allen generated compound annual revenue growth of 2.7% over the
last five years versus a 9.9% average of its peers

Ethan Allen’s revenue increased a mere 11% in aggregate over the last
five years

Ethan Allen has an insignificant online presence, with e-commerce
revenue estimated at between 2% and 5% of total revenue, versus peers
such as Restoration Hardware and Williams-Sonoma, who each generate
approximately 50% of their revenue from online and non-store sales

Restoration Hardware’s revenue five years ago was not materially
different from Ethan Allen, yet it was able to re-position the company
for merchandising success and has seen its revenue increase 142% in
aggregate over the last five years

“We look forward to releasing additional material in the future that
paints a more comprehensive picture of how we believe the Company’s
stale and entrenched Board has been unable to add value and effectively
serve as a counter-weight to the will of Mr. Kathwari, who we believe is
the prototypical “Imperial CEO.” Shareholders are encouraged to access
our website entitled “Redesign Ethan Allen,” which is available at www.RedesignEthanAllen.com,
for more information.”

About Sandell Asset Management Corp.

Sandell Asset Management Corp. is a leading private, alternative asset
management firm specializing in global corporate event-driven,
multi-strategy investing with a strong focus on equity special
situations and credit opportunities. Sandell Asset Management Corp. was
founded in 1998 by Thomas E. Sandell and has offices in New York and
London, including a global staff of investment professionals, traders
and infrastructure specialists.

Sandell Asset Management Corp., Castlerigg Master Investments Ltd.,
Castlerigg International Limited, Castlerigg International Holdings
Limited, Castlerigg Offshore Holdings, Ltd., Castlerigg Active
Investment Fund, Ltd., Castlerigg Active Investment Intermediate Fund,
L.P., Castlerigg Active Investment Master Fund, Ltd., Castlerigg Event
Driven and Arbitrage Fund, Thomas E. Sandell (collectively, “Sandell”),
Edward Glickman, Kathy Herbert, Richard Mansouri, Annelise Osborne, Ken
Pilot and Alex Wolf (collectively with Sandell, the “Participants”),
intend to file with the Securities and Exchange Commission (the “SEC”) a
definitive proxy statement and accompanying form of proxy card to be
used in connection with the solicitation of proxies from the
stockholders of Ethan Allen Interiors Inc. (the “Company”) in connection
with the Company’s 2015 annual meeting of stockholders. All stockholders
of the Company are advised to read the definitive proxy statement and
other documents related to the solicitation of proxies by the
participants when they become available, as they will contain important
information, including additional information related to the
participants. When completed, the definitive proxy statement and an
accompanying proxy card will be furnished to some or all of the
Company’s stockholders and will be, along with other relevant documents,
available at no charge on the SEC website at http://www.sec.gov/
and at our website at http://www.RedesignEthanAllen.com.

Information about the Participants and a description of their direct
or indirect interests by security holdings will be contained in the
preliminary proxy statement on Schedule 14A to be filed by Sandell Asset
Management Corp. with the SEC on October 14, 2015. This document can be
obtained free of charge from the sources indicated above.